New regulations crack down on auto insurance fraud

The state will make changes to requirements for auto insurance companies that regulators say are aimed at cracking down on fraudulent claims, according to Department of Financial Services Superintendent Ben Lawsky.

In March, DFS began poking around so-called “medical mills” that complete some portions of accident claims. The changes, according to DFS:

· Puts an end to requirements that mandate insurers pay for treatments that were never actually provided, or pay more than the established fee schedule for a given service.

· Prevents healthcare providers from ignoring requests for evidence that the treatments they are providing are medically necessary by setting a 120 day deadline to provide requested information.

· Closes the loophole that allows courts and arbitrators to force insurers to pay fraudulent claims simply because the insurer made minor paperwork errors when processing a claim.

And here are some happy quotes:

“These reforms will ensure that New Yorkers get the proper and timely treatment for legitimate injuries that they deserve, while closing loopholes that allow criminal medical mills to scam the system and drive up insurance premiums. We can and must have a system that works effectively for those in need and protects all drivers from paying a ‘Fraud Tax’ imposed by criminals,” Superintendent Lawsky said. “The new regulations will give insurers more time to prove fraud and prevent payment, unlike the current system that requires insurers to pay no-fault claims within 30 even when they suspect that health care services have not actually been provided.”

“I applaud Governor Cuomo and Superintendent Lawsky for continuing the fight to reform New York’s broken no-fault auto insurance system,” said Kristina Baldwin, co-spokesperson for Fraud Costs NY and assistant vice president for Property Casualty Insurers Association of America. “If implemented, these regulatory changes will help close the glaring loopholes that allow criminals to rip off the system and control the ensuing costs which are passed on to drivers by way of higher premiums.”

Ellen Melchionni, co-spokesperson for Fraud Costs NY and president of the New York Insurance Association said, “Governor Cuomo and Superintendent Lawsky demonstrated real leadership when they took the critical first step reforming New York’s no-fault system by targeting unscrupulous medical providers. Now, they are continuing the fight with important and crucial reforms that will protect consumers to ensure that those truly injured in an accident receive the necessary treatment they deserve.”

Gary Henning, Regional Vice President, Northeast Region American Insurance Association, said, “The American Insurance Association applauds Governor Cuomo and Superintendent Lawsky for their continuing efforts against no-fault fraud with the promulgation of these regulations. These common-sense reforms will help take costs out of the no-fault system to the benefit of New York’s drivers.”